What will happen to the stock market? This question is rapidly arising in the minds of retail investors. Because for the second consecutive day, a huge decline is being seen in the Indian stock market. Midcap and smallcap stocks are being beaten the most. Shares of government companies have fallen the most.
Actually, there are global reasons behind this decline, India’s economy is strong and the market knows this. But if we look at other countries, there is chaos there, the effect of which is now visible on the Indian markets.
Chaos in the US market
Let us tell you, the biggest decline is in the US stock market, after that there has been an earthquake in the Japanese stock market. Apart from this, there is chaos in the Taiwan stock market as well. Taiwan’s benchmark index Taipei has seen the biggest decline in 57 years. Taipei has fallen by 8.4 percent. This is the biggest one-day decline since 1967.
This step of Japan has a big impact
Japan’s stock market Nikkei has fallen by more than 12 percent, this is the biggest fall in a day in the last 37 years. Today has been the worst day for the market here since 1987. In fact, Japan’s central bank, the Bank of Japan, has increased the policy interest rates by 25 basis points (0.25%) on Wednesday (July 31, 2024) after about 14 years.
After this, the Japanese currency Yen showed a rise against the dollar. Due to low interest rates, the Japanese currency Yen was used for forex strategies like ‘Carry Trade’. This means that by borrowing Yen at a low interest rate, it was invested in assets with high yields. But now after the increase in rates, the strategy of forex traders has suffered a setback. Due to this also, turmoil is being seen in the global markets.
Fear of further decline continuing?
At the same time, the world’s largest and strongest economy, America, is also in a bad condition. At present, US futures are indicating that the market decline is not going to stop anytime soon. Dow Jones futures are seen to be down by 400 points. While Nasdaq futures are seen down by 700 points. The weak manufacturing PMI data released in America has caused an earthquake. Here the manufacturing index for July was 46.8%, which is worrying. Manufacturing index less than 50 percent is not considered a good sign.
Apart from this, the pressure on the stock market increased when the unemployment rate in America was higher than expected. US dollar rates and treasury yields also increased. In the US stock market, stocks of giant technology companies like Nvidia, Intel, Apple, Broadcom Inc. are seeing a huge decline.
Lower circuit in South Korea market
South Korea’s stock market has hit a lower circuit, which is the worst fall for the South Korean market since 2001. The fall in demand in China is also giving strength to the signs of recession. Especially the demand for crude oil has fallen in China. Due to which the prices of crude oil are falling. At the same time, the markets of Italy, Hong Kong and France have also fallen by 5 percent. The price of inflation in the Gulf countries is also a matter of concern for the market.
Source (PTI) (NDTV) (HINDUSTANTIMES)